Opinion

Will existing data enable HR directors to stay ahead of the economic game?

David Fairhurst, 07 Sep 2011

David Fairhurst

Here’s the September forecast: the start of the month will be bright and summery, but this warm spell will be followed by windy, showery weather, which by the end of the month will turn stormy, with severe gales.

Now, even though I have looked at the long-range forecasts from half-a-dozen different metrological organisations, I wouldn't be surprised if this prediction is wrong. That is because the complexity of the weather means that even relatively short-term forecasts are far from reliable, a fact which explains meteorologists' fondness for 'nowcasting'.

Nowcasting uses good old-fashioned human beings to assess the latest radar, satellite, and observational data to predict the weather for the next six to 12 hours. It is only a small step forward from feeling seaweed and chanting "Red sky at night", but, with reported 80%-90% accuracy, it is state-of-the-art.

So meteorologists forecast tomorrow with a high degree of accuracy - but economists will tell you they have the even tougher job of forecasting for today with similar precision. The UK's second quarter GDP growth forecast of 0.2% was announced three weeks after the quarter had ended, whereas GDP figures for Q2 won't be available until October.

Which explains why economists are also interested in nowcasting - and why they have been looking particularly closely at influenza.

Seasonal 'flu epidemics are unpleasant, disruptive and result in up to half a million deaths each year. Early detection and rapid response to outbreaks can significantly reduce their impact. But herein lies a problem, because the data recording the number of patients presenting influenza-like illnesses (ILI) is typically gathered on a weekly basis, with a reporting lag of one to two weeks - and in this time-lag a 'flu outbreak can run riot.

However, in 2009, statisticians at Google published a letter in Nature offering a simple nowcasting solution. "Because the relative frequency of certain influenza- related Google searches is highly correlated with the percentage of physician visits in which a patient presents with ILI, we can accurately estimate the level of weekly influenza activity in each region of the US, with a reporting lag of one day."

One day! That is a game-changing difference in itself, but what is even more important here is that Google searches are a "precursor signal": patients are looking for information on 'flu symptoms, a precursor to actually coming down with 'flu and visiting the doctor. In other words, the Google team hadn't just uncovered a powerful real-time nowcasting tool - they had found a nowcasting tool that was running ahead of real-time.

Economists pounced on this discovery and are using the same technique to predict the movement of key indicators, such as retail, car and house sales. All of this came from data which was already being captured and which is freely available.

Which brings me to HR - because in my column last month I highlighted the CIPD's 'Next Generation HR' research project and the pivotal role it places on an insight-driven approach to people practices. I observed that most HR departments are awash with data: it was identifying insights buried within the data that was the real challenge.

This is why I am excited about the nowcasting concept, because it gives us a valuable lens through which we can look at data in a new and interesting way.

What are the things we want to predict about our workforce (engagement, turnover, uptake of benefits etc)? And are there any precursor signals in our existing data that will enable us to be ahead of the game?

Imagine the impact HR could have on an organisation with insights like these.

As for this month's weather, we just have to take what we get and remember the wise words of Billy Connolly: "There is no such thing as bad weather, just the wrong clothing, so get yourself a smart new raincoat and live a little."

David Fairhurst is chief people officer, Europe at McDonald's

2 comments on this article

Your comment

Click here to comment

'Flu

Peter Marno 07 Sep 2011

As always David Fairhurst's article are thought provoking. However, let us stick with 'flu to start with. From an employer's point of view it will be encouraging that those who claim 'flu actually have it and aren't just using the self-diagnosis as a means to being off sick. Moving on to HR Departments that are 'awash with data' they would benefit from seeing how much 'flu was reported in previous years and considering an immunisation programme to minimise the impact this winter. In the same vein there is a mass of good information in most sets of sickness absence data - but it is knowing what to look for!

Nowcasting

Diana Hogbin-Mills 07 Sep 2011

Building on David's article, the point being made here is - what data do we have, or can we collect that will enable HR to make real time decisions rather than the historical time lagged decisions? Nowcasting is the way forward and will enable HR departments to provide timely insights.  We are using the nowcasting trend by harnessing technology, social media and gamification to enable HR departments to track and address employee engagement in the here and now.  Why would you wait months to understand the mood of your employees, when in just a few seconds you can understand reactions to what is happening rather than what has happened. As well as employees, Gen Y's in particular don't want to wait if they have something to say. Email me if you want to know more: info@talentmax.co.uk

Latest Issue - May 2012

MA Business & Leisure Limited © Copyright 2012, All Rights Reserved